EU stocks see fifth weekly rise despite US budgetary fears

Bloomberg

Sun, Dec 23, 2012 - Page 15

European stocks rose for a fifth week, posting the longest stretch of weekly gains in four months as investors awaited developments in US negotiations to stop automatic tax hikes and spending cuts.

SBM Offshore NV soared 18 percent after seeking to settle a dispute with Talisman Energy Inc, while Centamin PLC surged 18 percent after the gold producer said operations have resumed at its Sukari mine in Egypt. Royal KPN NV plunged 19 percent as the Dutch phone company partly owned by Carlos Slim’s America Movil SAB cut its dividend.

Centamin PLC surged 18 percent after saying normal operations would resume at its Sukari mine after a dispute over diesel supplies that stopped operations.

Alcatel-Lucent rose 12 percent. The French government wishes to protect Alcatel’s strategic submarine cable unit, Les Echos reported on Friday. France Telecom SA is ready to purchase the unit in deal that could give Alcatel between 100 million euros (US$131.8 million) and 150 million euros, the newspaper said.

The benchmark STOXX Europe 600 Index rose 0.6 percent to 280.95 this week, paring gains after Republicans in the US House of Representatives canceled a vote on higher taxes for top earners, fueling concern budget talks will fail. The equity benchmark has rallied 20 percent from this year’s low on June 4 as the European Central Bank and the US Federal Reserve introduced bond-buying programs, and US GDP growth beat forecasts.

“The ‘fiscal cliff’ discussions are still on track and while there will be moderate risk aversion as US budget talks gyrate, the broad expectation is that there won’t be a disaster,” said Manish Singh, who helps manage US$2 billion as head of investment at Crossbridge Capital in London. “What supported sentiment this week was a better-than-expected third-quarter GDP in the US and investors getting excited about Japan again.”

The Bank of Japan this week expanded its asset-purchase fund to ￥76 trillion (US$903 billion) from ￥66 trillion and kept its credit-lending program unchanged at ￥25 trillion.

The Liberal Democratic Party of Japan reclaimed power in a landslide victory on Sunday last week. Former Japanese prime minister Shinzo Abe’s party now has a mandate to implement fiscal and monetary stimulus plans.

US lawmakers will not vote on the end-of-year budget until after Christmas, giving them less than a week to reach agreement after US House of Representatives Speaker John Boehner yielded to anti-tax resistance in the Republican party and scrapped a plan to allow higher tax rates on annual income above US$1 million.